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Car owners are to face a rise in motor insurance costs and taxes in the wake of the recent budget announcement.
Chief Executive of AA Insurance, Andrew Strong announced, “In order to reach profitability by 2009, premiums will have to rise by at least 20 per cent over the next two years.”
This news comes off the back of a report by Datamonitor which predicted the UK car insurance market might make a profit in 2009 after 14 years of un-profitability. This saw firms having to concede money to diminish car insurance involvement, with profits from better sectors such as home insurance.
Consumers might not be financially hit as hard as expected though. 85 per cent of people base their policy choices on price and the introduction of price comparison websites has enabled premium rises to be kept in check.
Figures released by the AA show that car insurance rose by 5.9 per cent over 2007, with similar rises expected for 2008.
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